Eu Stock Futures Turn Lower Amid China Us Tensions

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Eu Stock Futures Turn Lower Amid China Us Tensions

EU Stock Futures Turn Lower Amid China-US Tensions

The stock markets across the European region opened lower on Monday due to high geopolitical tensions between China and USA. In addition, the investors also had to digest the payroll data from the USA, which was stronger than expected.

As for the futures contract, they were also trading lower across the board. The DAX futures were down by 0.5%, while the CAC 40 Futures from France was down by 0.6%. In the UK, the futures contract of FTSE 100 also fell by 0.4%.

Rising Risk Of Recession In The USA

The recent jobs data from the USA has made it clear that the Fed still has enough room to continue its rate hikes. However, this battle against inflation could have a major drag on the US economy. In fact, the effect will be so significant that it will push the USA into recession!

Just a few days ago, a rate hike of 25 basis points was rolled out by the Fed, which raised hopes that the Fed will eventually end its rate hike cycle. As a result of this optimism, stocks around the globe turned higher on Friday.

However, this led to profit-taking activity on Monday. So that's yet another reason why the EU stocks were lower on Monday.

And if we look at geopolitics, tensions are high between the USA and China. As per the news, a Chinese balloon was shot down by the USA. According to the US version, it was a spy balloon, while the Chinese officials say it was for scientific and meteorological purposes.

In addition, the Chinese officials also reiterated that the drifting of balloons into the USA airspace was accidental.

And if we look back to Europe, we got another 50 bps rate hike by the ECB, and one more hike is coming in the March meeting. This means that if we continue to get rate hikes in the EU region, it would have a bad effect on the EU stock markets.

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